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Structure Emergence in Corporate Mergers

This study explores the intricate social complexities arising from corporate mergers. It investigates how individual factors such as formal education, leadership experience, and perceived threats affect the topology and value of newly formed firms. By reviewing existing literature and modeling interdependencies among employees, the research highlights the significant role of internal connections in determining a new firm's efficiency and overall value. The findings emphasize the importance of maximizing connections to enhance performance post-merger.

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Structure Emergence in Corporate Mergers

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  1. Structure Emergence in Corporate Mergers Edward Bailey, University of Arizona Optical Sciences Amit Joshi, Anderson Graduate School of Management, University of California Los Angeles Ong Kiankok, La Trobe University, Australia Suhan Ree, Kongju National University Luis Armando Lujan Salazar, Monterrey Tech, Mexico Ricardo Valerdi, Center for Software Engineering, University of Southern California

  2. Outline • Problem Statement • Literature Review • Approach • The Model • Results • Attribute Comparison • Conclusions

  3. Problem Statement • The merging of two firms generates social complexities • How do individual factors affect? • New firm topology • Position in the new firm • Value of the new firm

  4. Literature Review • Previous studies of merger affect on • competitive relations/anti-trust • Market power congestions • Social forces that determine who stays • Formal education • Previous leadership experience • Perceived threat to management • Other human emotions

  5. B1 A1 A5 B5 B2 B6 B3 B4 A6 A2 A4 A3 Approach Firm A Firm B Firm C ? + = • Assumptions • Same market, slightly different competencies • Firm C will be made up of 6 < C < 12 • At least one employee at each level • Three levels available

  6. The Model Value = a1 * (Performance) + a2 * (Internal Connections) + a3 * (Hierarchy) + a4 * (Specialization) + a5 *( Performance * Specialization) a1 = a2 = a4 = a5 = 0.5 a3 = -0.3

  7. Results Value per employee

  8. Attribute Comparison

  9. Conclusions • Little work done on resulting social structures of firms after mergers • Interdependencies determine the level of efficiency in a new system • Internal connections add value to the firm Lesson: Maximize your connections

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